The British Software Alliance is a collection of major software publishers which police their intellectual property rights in the software which they distribute. SMEs should be aware of software licence management procedures and preferably, maintain register of software deployed in the business.
The Business Software Alliance (the BSA) represents software publishers. Its mission is to protect software houses and represents stakeholders in global efforts to improve the industry. Part of the role of the BSA is to identify companies using pirated – or unlicensed - software and collect license fees for the use. The software publishers themselves also actively pursue infringers - Microsoft and Adobe have reputations for being particularly diligent on this front with significant budgets to do so.
Inadequate licensing and piracy is seen by the software industry as a widespread problem. It is a relatively straightforward exercise to acquire unlicensed versions of major software titles. In 2013, the BSA estimated that 52 per cent of small and medium sized UK companies (SMEs) had carried out some form of unlicensed software use. This unlicensed use came in two flavours:
Enforcement is a major part of the BSA’s work. The increased competition faced by traditional software delivery models from newer practices such as software as a service (such as Office 365) are designed in part to reduce software delivered as a downloadable software products to automated and managed installation with a live internet connection. You can probably expect to see more of the SaaS delivery model which has already been rolled with a number major suppliers, such as Amazon. Expect more software publishers to adopt this mode of delivery as high speed broadband increases in prevalence and the costs of the delivery model decease for publishers.
Businesses and end users must make sure they have the correct licensing in place.
Investigations by software providers (or “software licensing audits”, depending upon who you speak to), may appear to be concerned with a technology issue but should be seen as a prelude to potential legal proceedings by businesses. Most of the major software providers have audit clauses in their contracts which SMEs are often unaware of, or are at least surprised by when their provider seeks to rely on them. Even without these clauses, software publishers are likely to be successful on an application for pre-action disclosure, or particularly nasty search orders.
If you receive a request for a software audit it is advisable to instruct specialist IT or intellectual property lawyers at the earliest opportunity to get a proper understanding of the implications, and what you should do if you do not respond or comply with the “request” for an audit. Proven software infractions can be costly both to your reputation and finances.
The BSA might chose shame infringing businesses through publicity while the financial costs can go beyond simply paying fees due on licensing shortfalls by including fines. Illegal use of software might lead to both civil claims for damages and also, in severe cases, criminal convictions. Therefore, the incentive for companies to comply with software licence is very real.
SMEs often take a reactive approach to the issue of software licensing audits – worry about it when it happens - but this is increasingly risky as it can lead to unbudgeted costs and reputational damage. Along with other matters which are left to the last minute, the eventual costs are likely to be exacerbated. Businesses that want to get on top of the issue can ensure that they stay compliant by following a number of simple guidelines.
The first, and possibly most straightforward step, is to make no assumptions. Although SMEs often hire IT contractors, they are not (primarily) liable for unlicensed software and pirated software. You should not assume that IT contractors also deal with the licensing of the software. The company should have independent procedures in place to check this.
Secondly, a software asset management programme in order to keep track of the software used in the company and the types and numbers of users. It can be as simple as an Excel spreadsheet. The BSA actually request responses to software audits in a spreadsheet format. It can be time consuming initially as it may require an internal audit of existing software and licenses. Once it is done however, it:
You will need to have a system for monitoring and managing software usage on an ongoing basis.
Also, if the IT contractor plays a role in deploying unlicensed software, they also could be jointly and severally liable with the business for copyright infringement. That loss could be recovered in a claim for contribution against the IT consultants.
Finally, you must have procedures in place to deal with changes in circumstances, such as a change of staff, mergers or freelancers installing software on PCs for temporary purposes. This will ensure that the company remains compliant with its software licences and steer clear of unwanted allegations of pirated software, despite a physical change in the operations of the company.
The business itself is responsible for ensuring it is legally compliant with software license terms and cannot pass or assign liability to its contractors unless it can be shown they were deliberately misled. The BSA actively enforces licensing agreements, pursues copyright infringement claims and launches investigations on an industrial scale into suspected breaches. Therefore businesses should take steps to comply with their legal obligations and to avoid unwanted surprises.
For business legal advice and more information on software publishers' rights and unlicensed software and pirated software audits, contact us online or call us on 020 7353 1770.
